Examiner Appointed to Aer Arann

sonyair

Examiner Appointed to Aer Arann
Thursday 26th August 2010: In the High Court this evening Justice Maureen Clarke appointed Mr. Michael McAteer of Grant Thornton as Interim Examiner to Comhfhorbairt (Gaillimh) trading as Aer Arann. The petition to enter examinership was made by the company following a resolution of its Board of Directors.

Justice Clarke set 8th September as the date for a full hearing of the company’s application and in the meantime Aer Arann is in interim examinership and under the protection of the Court.

Aer Arann intends to operate normally during the period of examinership and intends to fly all Aer Arann services and all Aer Lingus Regional services operated under the airline’s franchise agreement with Aer Lingus.

No flights have been cancelled or are planned to be cancelled and reservations can continue to be made on Aer Arann - Cheap Flights to Ireland, Cheap Flights to Dublin, the UK and Europe with Aer Arann. Aer Arann intends that there will be no impact on customer travel or bookings as a result of the move into examinership.

Aer Lingus will continue to work with Aer Arann on the provision of services through the franchise agreement between the airlines. All bookings for Aer Lingus Regional services can continue to be made with confidence on Aer Lingus- cheap flights, gift vouchers, hotels, car hire, & travel insurance

Following the High Court hearing on 8th September Aer Arann expects to remain in examinership for an initial period of up to 70 days. During that time the company will benefit from the protection of the Court from its creditors so that it can re-organise and re-structure the business.

Aer Arann and the Examiner will also use the time to negotiate with potential investors and a number of parties have expressed their interest in the airline.

Examinership is a provision in Irish company law that is designed to help companies that have financial difficulties but that also have a reasonable prospect of survival and the High Court, the Independent Accountants and Aer Arann consider that the company has a viable business plan. The airline will operate as normal in order to preserve as many of the 320 jobs in the company as possible and the hundreds of associated jobs in airports and aviation support services companies.

The decision to petition for examinership follows two years of loss-making trading in a difficult economic environment with recession negatively impacting the global aviation industry followed by the volcanic ash disruptions this year.

Following a cost reduction programme and the signing of the franchise agreement with Aer Lingus which has proven to be profitable Aer Arann was on budget for 2010. However the direct impact of the Volcanic Ash disruptions earlier this year and the subsequent drop in forward bookings and yield revenue led to the requirement to re-structure and seek new investment through examinership.

Details on Aer Arann’s performance will be reserved for the hearing in the High Court but in broad terms the airline lost approximately €6million in each of 2008 and 2009. Losses of €6million have been incurred to date this year predominantly due to the impact of the volcanic ash disruption. These combined losses have led to a deficit in shareholder funding of approximately €13million at the end of July this year.

The company had been trading well in the first quarter of 2010 but following the losses of the previous two years it did not have the cash reserves to deal with the downturn precipitated by the volcanic ash crisis in the second quarter.

Examinership has worked for a number of high profile Irish companies and in the United States a number of major airlines have entered the similar Chapter 11 system and having operated normally during their period in Chapter 11 they emerged as stronger airlines.

Aer Arann would like to thank all of the airline’s loyal customers for their support to date and looks forward to continuing to serve them

The examinership does not involve Aer Arann Islands which is a separate company.

lets hope they come out the good end of this

Poly

as a regular on their Donegal service, I hope things work out for the better.

Delancey

Best wishes to them .... but it should be borne in mind that the vast majority of companies that enter examinership only survive with (A) - significant new investment and (B) - with significant re-structuring that invariably involves job losses.

Trotter

It's a vital part of the survival of my local airport in Waterford. I hope they come out of this stronger for everyone's sake.

pclancy

Dam this is sad to see...i thought the Aer Lingus partnership was going to really help things along.

Run_to_da_hills

It said in this mornings Metro / Herald that there is some interest in this airline. Could this be O'Leary.

cson

Aer Arann won't die per se. The PSO routes they have are very valuable; they'll find an investor no problems. Otherwise you'd be looking at the closure of Galway/Waterford/Sligo etc.

Personally; if I had a sizeable lump of cash for them I'd try and base at Shannon with a few jets flying profitable routes - the likes of London/Faro.

Delancey

Run_to_da_hills wrote: »

It said in this mornings Metro / Herald that there is some interest in this airline. Could this be O'Leary.

I think he would have a struggle to get it past competition regulators both here and in Europe.

kelle

This is awful news, I hope they can survive this. It is great to be able to fly out with them to Doncaster where my brother lives.

Jim236

delancey42 wrote: »

I think he would have a struggle to get it past competition regulators both here and in Europe.

I doubt they'd have any problem clearing it with the regulators given that Aer Arann and Ryanair no longer compete on any routes. Not that Ryanair have any interest in taking them over anyway. They'll definitely be taken over by someone, but I'd say the bids will most likely come from Aer Lingus, CityJet, or FlyBe.

cson wrote: »

Aer Arann won't die per se. The PSO routes they have are very valuable; they'll find an investor no problems. Otherwise you'd be looking at the closure of Galway/Waterford/Sligo etc.

The PSO routes only make up about 20-30% of Aer Arann's revenue, and most of them will be axed next year, so if anything the PSO routes are going to hamper the examiner's efforts to produce a new business plan, because what PSO routes, if any, will survive is unknown.

Its the Aer Lingus Regional routes that any investor will be eyeing up, and they'll be the key to Aer Arann's survival.

calibrated

If only there was an airline like this interested:

Dublin based
Profitable
ATR operator
Irish AOC
Leases A/C to RE
Does mx for RE
Employs some ex-RE crew/staff.

Hmmm....I wonder.

mayflyatr

And has recently dipped into the passenger charter market this year on the 73.......

calibrated wrote: »

If only there was an airline like this interested:

Dublin based
Profitable
ATR operator
Irish AOC
Leases A/C to RE
Does mx for RE
Employs some ex-RE crew/staff.

Hmmm....I wonder.

Jim236

mayflyatr wrote: »

And has recently dipped into the passenger charter market this year on the 73.......

Europe Airpost was flying passenger charters long before it was bought by Air Contractors. Air Contractors' core business is still cargo.

calibrated

Jim236 wrote: »

Europe Airpost was flying passenger charters long before it was bought by Air Contractors. Air Contractors' core business is still cargo.

EAP is the oldest airline in France, it was flying pax long before a lot of airlines. That's not the point.

While ACL's "core" business is freight it holds a pax AOC which means its now in the pax market.
ACL/RE have very close ties as I've mentioned already.
Don't be suprised if their name pops up in the news over the next few days.

mayflyatr

As Calibrated has said, Air Con are now in the pax market so I most certainly would not rule them out on some investment in RE.

It's the usual rumour mill, we will just have to wait and see what happens. I do think however, RE will come out of this a much healthier outfit.

calibrated wrote: »

EAP is the oldest airline in France, it was flying pax long before a lot of airlines. That's not the point.

While ACL's "core" business is freight it holds a pax AOC which means its now in the pax market.
ACL/RE have very close ties as I've mentioned already.
Don't be suprised if their name pops up in the news over the next few days.